ABSTRACT Post-acute care service accounts for 73% of the variation in the cost of health care services. Geographic variation has been found in virtually all areas of healthcare. The effort to understand regional variation has been focused on acute medical services, with less emphasis on post-acute care rehabilitation. Measures of geographic variation include areas ranging from large state and multistate regions to smaller primary care and hospital service areas. To date, there is no rehabilitation-specific tool for characterizing variations in post-acute care services, which hinders our ability to understand the drivers of variation and compromises efforts to improve the quality of care and minimize unwarranted cost differences. We propose to develop and evaluate rehabilitation service areas for impairment groups who receive high cost post-acute services in inpatient rehabilitation facilities, skilled nursing facilities, and long-term care hospitals. Our specific research aims are to: 1. Develop geographic areas (i.e. Rehabilitation Service Areas) for post-acute care rehabilitation using national data from CMS. 2. Evaluate the utility of Rehabilitation Service Areas for characterizing differences in the percentage of individuals discharged to the community within 30, 60, and 90 days after rehabilitation. 3. Evaluate the utility of Rehabilitation Service Areas for characterizing the percentage of individuals readmitted to acute hospitals within 30, 60, and 90 days. Importance & Likelihood of Success: The number of individuals requiring post-acute care rehabilitation is expected to grow as the population ages. As policy makers move forward with reform efforts for improving transitions through post-acute services, it is critical to have a tool (rehabilitation service areas) for understanding variation in the use, outcomes, and quality of care. Our interdisciplinary team has over 20 years of experience using large administrative datasets to study rehabilitation outcomes, including regional variation in functional status in inpatient rehabilitation. The proposed research is an extension of our work on variation in rehabilitation outcomes to include services in skilled nursing facilities and long-term care hospitals. Findings of this research address the AHRQ Special Emphasis Notice on Healthcare Delivery Systems and the AHRQ Research Priority by developing a tool policy makers can use to evaluate post-acute care and the ?extent and cause of geographic variation in costs, quality and utilization.?